Mohammadi v. Ardalan, 2021 ONSC 6433
COURT FILE NO.: FS-18-01997
DATE: 20210928
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Mohammadi, Elham, Applicant
AND:
Ardalan, Kasra, Respondent
AND:
Ansarian and Masoud, Respondent
BEFORE: Papageorgiou J.
COUNSEL: M. Maleki/ H. Niman, for the Applicant
Emails: Meysa@malekibarristers.com
G. Karohotzitis/C. Amiri, for the Respondent Ardalan Kasra
Emails: Gkarahotzitis@thomsonrogers.com
G. Joseph, for the Respondent Ansarian and Masoud
Email: Garyj@mpllp.com
HEARD: September 14, 2021
ENDORSEMENT
The Motions
[1] The Respondent, Kasra Ardalan, (Kasra) brings a motion for the release of the net proceeds of sale of two properties, 53 Wimpole Drive, Toronto, Ontario (the “Wimpole Property”) and 169 Beechwood Avenue, Toronto, Ontario (the “Beechwood Property”) (together “the Properties”).
[2] The proceeds total $4,933,570.36 and are currently in trust with the parties’ real estate lawyer, Ms. Jolanta Kryskowicz.
[3] Kasra requests that it be paid out in equal portions in the amount of $2,466,785.18. The Applicant, Elham Mohammadi (Elham), opposes this in part. She is agreeable to the release of $2,000,000 to each of them but requests that $953,712.36 continue to be held in trust to secure her claim.
[4] Elham also brought a cross-motion for partition and sale of another property known as 298 Hollywood Avenue, Toronto, Ontario (the “Hollywood Property”).
[5] For the reasons that follow I am ordering that proceeds of sale in the amount of $2,077,785.18 be paid out of the proceeds of sale of the Beechwood and Wimpole Properties to each of Kasra and Elham within seven days and that $778,000 continue to be held in trust.
[6] I am also ordering that the Hollywood Property be sold and that a minimum of 25 % of the proceeds of sale remain in trust. This is without prejudice to the parties’ bringing a motion for preservation of more of these funds or distribution of same if they cannot agree.
Analysis
Preliminary Objection
[7] Kasra and Kasra’s parents attended and argued that Elham’s cross-motion should not be heard at the same time as Kasra’s on the basis that they booked this motion, there was insufficient time to deal with both motions, and they were not interrelated enough to require being heard together.
[8] In paragraph 7 of his September 3, 2021 affidavit Kasra stated: “It is my understanding that in the event of a cross-motion, the matter in its entirety must not exceed the time allotted for a regular motion. If this Honorable Court deems that both motions cannot be heard within one hour, I ask that my motion be heard on September 14, 2021 and that the Applicant’s motion be heard on another date.”
[9] Rule 2(3) of the Family Law Rules, O. Reg. 114/99, directs the court to deal with cases justly in a manner that saves time and expense. No one argued that they wished to file any additional materials with respect to the cross-motion or that they were not prepared to argue the motion on the materials before me.
[10] I determined that the matters were related and that there was sufficient time to deal with them both. I have also determined that they are related to some extent.
Proceeds of Sale of Wimpole and Beechwood
[11] Kasra and Elham were the joint owners of the Wimpole and Beechwood Properties and are presumptively entitled to 50 % of the proceeds less their share of maintenance costs: Korman v. Korman, 2015 ONCA 578, 126 O.R. (3d) 561, at paras. 40 and 45.
[12] Kasra previously earned income from his employment as Technical Director—Engineering for Rambus. His past reported income was as follows: 2017: $282,000, 2018: $237,000, 2019: $242,000 and 2020: $289,000.
[13] In November 2020 he was terminated and received a severance package of $202,338.
[14] He is seeking release of the proceeds from the Beechwood and Wimpole Properties to invest and earn an income.
[15] Elham requests that $953,712.36 remain in trust to secure her equalization and other claims.
[16] At the motion, there was a dispute between the parties as to the applicable legal test which Elham must satisfy
[17] Elham relies upon case law where courts have said that if jointly held property is sold prior to trial, prima facie, the net proceeds of sale should be held in trust pending the determination of equalization to avoid prejudice to either spouse arising from the sale: e.g. Batler v. Batler (1988), 1988 CanLII 4726 (ON SC), 67 O.R. (2d) 355 (H.C.), at para. 7; Arlow v. Arlow (1990), 1990 CanLII 12267 (ON SCDC), 27 R.F.L. (3d) 348 (Ont. Dist. Ct.); and Gray v. Gray (1990), 1990 CanLII 12216 (ON SC), 31 R.F.L. (3d) 97 (Ont. Gen. Div.).
[18] Kasra argues that Elham must show a prima facie case that she is entitled to an equalization payment before any amounts can be held back: e.g. Taus v Harry, 2016 ONSC 219, at para. 31[^1]; Smith v. Smith, 2020 ONSC 6824. at para 46; Benvenuto v. Whitman, 2012 ONSC 2696, at paras. 29-35; Syed v. Syed, 2017 ONSC 2588, at para. 111; and Both v. Both, 2008 CanLII 15219 (ON SC), 53 R.F.L. (6th) 65, at para. 18.
[19] Some cases say the test is whether it is “likely” that a party will be entitled to an equalization payment: Fatahi-Ghanderhari v. Wilson, 2016 ONSC 6863, at para. 90, while others consider whether there is a “real risk” that the applicant’s equalization claim could be defeated if the order is not made: Burke v. Poitras, 2020 ONSC 3162, at para. 265; Marot v. Marot, 2019 ONSC 866, 22 R.F.L. (8th) 349, at para. 31; Popat v. Popat, 2021 ONSC 5194, at para. 80.
[20] The words “likely” and “real risk” do suggest that the party seeking the preservation order must make out a relatively strong case.
[21] Yet another stream of cases applies the usual test for a preservation order with some qualifications because of the underlying policy of the Family Law Act, R.S.O. 1990, c. F.3.
[22] In Bronfman v. Bronfman (2000), 2000 CanLII 22710 (ON SC), 51 O.R. (3d) 336 (S.C.), at para 29, Justice Sachs considered the interplay of sections 12 and 40 of the Family Law Act with the test for an injunction which involves: a) the relative strength of the plaintiff’s case (in other words whether there is a serious issue to be tried), b) the balance of convenience, and c) the possibility of irreparable harm. She concluded that it is the first two factors which are applicable to an application for preservation of proceeds under section 12, at paras. 29 and 31:
The first two factors are relevant to the determination of an application for a non-dissipation or restraining order under s. 12. Clearly a court will want to consider how likely it is that the plaintiff or petitioner will receive an equalization payment. It will also want to consider the effect that granting or not granting such an order will have on the parties. Under s. 12, relevant to this exercise is an assessment of the risk of dissipation of the assets in existence prior to trial.
… There are certain cases where the factual record, and the applicable legal principles, make it very clear that a spouse will be entitled to an equalization payment in a particular amount. In such cases, considerable weight will be given by the court to this factor when deciding an interim application under s. 12, and perhaps less weight to the other factors. There are others where the facts and law are disputed and complicated…In such cases, the court will want to go on and give serious consideration to the other factors, being the balance of convenience and the risk of dissipation.
[23] Kasra’s argument that Elham must establish a prima facie case or prove her case to a high standard or threshold makes no sense. Even in non-family law cases (where the over-arching policy objects of the Family Law Act do not apply), pursuant to Rule 45 of the Rules of Civil Procedure, the applicant must only establish that i) the assets sought to be preserved constitute the very subject matter of the dispute, ii) there is a serious issue to be tried, and iii) the balance of convenience favours the granting of the relief: BMW Canada Inc. v. Autoport Ltd., 2019 ONSC 4299, 35 C.P.C. (8th) 141 (Ont. Div. Ct.), rev’d on other grounds 2021 ONCA 42, at paras 42 &. 43.
[24] I sent the BMW decision to the parties for their written submissions. Elham says that the test in BMW applies. Kasra says it does not. He continues to assert that the test for a preservation order under section 40 and 12 of the Family Law Act is essentially higher than the test for a preservation order under Rule 45 of the Rules of Civil Procedure. In particular, Kasra asserted in his supplementary submissions that Elham must even establish irreparable harm. This cannot be, even if the test is different under the Family Law Act.
[25] I am following Justice Sach’s direction in Bronfman as to the applicable test. Bronfman takes into account the usual test for a preservation order under the Rules of Civil Procedure and modifies it to account for the objectives of the Family Law Act. In my view, that is the appropriate approach. Therefore, I must consider: a) the relative strength of Elham’s equalization claim, or whether she has demonstrated a serious issue to be tried; b) the risk of dissipation; and c) the balance of convenience. If she demonstrates a very strong claim, then the second two criteria are less important.
[26] I note that in any event, Elham satisfies all the elements, even if the BMW test is applicable without qualification.
Claim to the Proceeds/ Relative Strength of the Equalization Claim/Serious issue to be tried
[27] First, I am satisfied that a claim for an equalization payment is sufficient to trigger a spouse’s ability to seek a preservation order in respect of proceeds of sale of jointly held property. This type of claim has been recognized as warranting a preservation order in many family law cases, if other aspects of the test are satisfied. See all of the cases cited by the parties which implicitly recognize this.
[28] Elham claims an equalization payment in the amount of $777,461.99 in her NFP statement. Kasra agrees that if she is successful in her various property claims, this will be the equalization payment he owes her.
[29] Kasra has filed three NFP statements in various scenarios which all show that even in his best case scenario he will owe Elham an equalization payment in the minimum amount of $179,060.59:
NFP # 1: $285,413.47
NFP # 2: $288,062.22
NFP # 3: $181,709.34
NFP # 4: $179,060.59
[30] After Elham raised issues regarding Kasra’s above NFP statements, he agreed in his September 8 affidavit that his financial statements were incorrect in that he did not include $35,961.13 which he held in a BMO account as well as $178,973.63 held in a joint account on the date of separation which is now at nil. He also referenced other debts which he added to his financial statement. He did not provide any analysis as to the impact of all of these changes. Overall, it appears to me that taking into account Kasra’s amendments, the above NFP statements filed by Kasra in his best case scenario are understated.
[31] Elham also claims post separation adjustments of $320,944.48 for a total of $1,098,406.47. She has a strong argument regarding many post separation costs as Kasra has been living in the Hollywood Property for the last three years with monthly expenses of approximately $4,500 per month being paid from their joint account.
[32] Kasra says he is also entitled to post separation payments related to construction costs of the Hollywood Property (defined below) in the approximate amount of $1,000,000. While Elham does not dispute that she owes something, she disputes the amount he claims, as well as the amount that he attributes to her. I am not in a position to sort out all the credibility and other issues related to this claim but even if it is true, the most that Elham would owe is her share proportionate to her 37.5 % ownership interest or $375,000. In fact, this is very close to the number which Kasra said she owed previously. It appears on this record that their post separation claims will almost cancel other each other out.
[33] Therefore, Elham has sufficiently established that she will be entitled to an equalization payment; the only question is how much.
[34] The evidence regarding the quantum is complex and disputed. There is the dispute over Kasra’s parents’ entitlement to an interest in the Hollywood Property and contributions which they have made to it as well as a dispute over the extent of Elham’s interest in a municipal property known as 329 Spring Garden Avenue (“Spring Garden”) as at the date of marriage. There is also a dispute as to $157,234.48 which Elham says she owes the Canada Revenue Agency in respect of the Spring Garden property. Kasra says she has not provided any documentary support for this CRA debt. He also says that she has failed to take into account capital gains tax he would owe on one of his properties.
[35] Most of these issues involve credibility which I cannot resolve on this motion.
[36] Nevertheless, I am satisfied that Elham has established a serious issue to be tried in respect of her positions with respect to her equalization claim. Therefore, I am satisfied as to the relative strength of her claim to a significant equalization payment and post separation adjustments. However, given the set-off claim advanced by Kasra with respect to his post separation expenses, I am satisfied that $778,000 is sufficient to secure Elham’s claims for equalization, on the record before me.
Risk of dissipation
[37] Kasra asserts that there is no risk of dissipation as he has never dissipated anything in the past. In my view, past dissipation is not required to demonstrate future risk. In Awada v. Awada, 2021 ONSC 4049, 56 R.F.L. (8th) 219, at para. 26, the Court considered inaccuracies as to how much money a spouse has withdrawn from joint accounts over the years and the fact of incomplete disclosure sufficient.
[38] Elham has provided the following evidence with respect to Kasra’s and his parents’ conduct which she says justifies her concerns that there is a risk of dissipation.
a. Legal title to the Hollywood Property is held by Kasra’s parents. There is a trust declaration whereby Kasra’s mother holds the Hollywood Property in trust for Kasra and Elham as to a 75 % interest. Despite repeated requests on November 12, 2020, December 18, 2020 and July 6, 2021, as of August 27, 2021 Kasra had failed to provide updated mortgage statements to address Elham’s concern that the property not be encumbered. In his last communication of July 6, 2021, Kasra’s counsel stated: “Mr. Ardalan advises that the mortgage statements are issued semi-annually. We will provide the statements once available.” However, in his September 3, 2021 affidavit he provided a mortgage statement dated December 31, 2020 addressed to him. I am drawing an adverse inference from his holding back this disclosure in a timely manner given its importance to Elham. It was available given the date on the document but for some reason, he held it back notwithstanding Elham’s repeated requests.
b. Because Kasra’s mother holds legal title to the Hollywood Property, she is in a position to deal with the Hollywood Property and/or encumber it.
c. Kasra recently renewed the mortgage in relation to the Hollywood Property as a five year closed mortgage without advising Elham, knowing that she had scheduled her motion to sell it.
d. Kasra has relied upon an allegedly fraudulent document during questioning in an attempt to obtain an admission from Elham that they netted over $1.2 million from property that does not even exist. The document dated January 28, 2016 bears the name of a lawyer who went missing in 2013, three years before the signing of the document and does not even contain the correct spelling of the lawyer’s name. Elham’s lawyer conducted a property search which shows that the property in question does not even exist. Kasra does not deny much of this. His only response is his assertion that Elham was involved in the creation of this document and his assertion that she has “operated her financial affairs in an abnormal manner.” Kasra’s argument that Elham herself engages in or supports fraudulent transactions is not a defence to her allegation that his conduct in this regard supports a risk of dissipation.
e. Elham has also lead evidence that in April 2018 Kasra transferred $150,000 from his line of credit to his joint RBC account with his father. He then transferred this amount to an unknown account. When asked about this, Kasra gave inconsistent evidence. First he said these were loan payments to his father. A year later he said they were repayment of construction costs. In his responding affidavit dated September 3, 2021, he says that he transferred $150,000 to his brother who was considering purchasing a property. He says his brother raised his own funds and returned this money. However, in his affidavit dated October 2018 he stated that “since separation, I have exhausted all my financial resources” and have “sold most of my stocks, my TFSA’s and maxed out my line of credit.” This is not consistent with his having had the ability to give his brother $150,000 for a home in April 2018.
[39] While I am not in a position to finally decide the merits of the above issues, I am satisfied that Elham has provided sufficient evidence to support her claim that there is a real risk of dissipation or other dealings with Kasra’s assets, including the Hollywood Property.
[40] Like Justice Emery in Barbini v. Edwards, 2014 ONSC 6762, at para. 91, I find a preservation order of enough proceeds to secure Elham’s equalization payment is “warranted given the complexity of the issues yet to be determined by the court in this application, questions of credibility on those issues and the ever present risk that … assets could be dissipated to defeat the rights of another without it.”
Balance of Convenience
[41] The balance of convenience also favors Elham. Kasra will still receive more than $2,000,000.
[42] The harm to Elham of potential dissipation greatly exceeds the potential harm to Kasra.
[43] Further, as will be seen below, I am ordering the sale the Hollywood Property which is valued at approximately $4,000,000. Elham is prepared to agree to the distribution of all those funds except for 25 % to secure Kasra’s parents’ claim. Therefore, he will be in a position to receive significantly more than the moneys being held back from the Beechwood and Wimpole proceeds.
[44] While there is no formal preservation motion before me, as in Christie, at para. 4, I am prepared to treat Elham’s opposition to Kasra’s motion for distribution as a request for a preservation order. I am guided by Rule 2(2) of the Family Law Rules, O. Reg. 114/99, which directs the court to deal with matters justly. Given all the caselaw before me which did not require any formal preservation motion for the holding back of funds, it is unfair to Elham to dismiss her request because she did not bring a formal motion. No one argued any prejudice on this basis.
[45] Elham has asked that the distributions be staggered and tied to the listing and the ultimate sale of the Hollywood Property if ordered. I see no reason to make such order. She argues that Kasra may try to frustrate the sale of the Hollywood Property. If he does, there are legal mechanisms she can use to ensure compliance with any court order.
Sale of the Hollywood Property
[46] Sections 2 and 3(1) of the Partition Act, R.S.O. 1990, c. P.4, provide as follows:
Who may be compelled to make partition or sale
2 All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to dower, tenants by the curtesy, mortgagees or other creditors having liens on, and all parties interested in, to or out of, any land in Ontario, may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only. R.S.O. 1990, c. P.4, s. 2.
Who may bring action or make application for partition
3 (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested. R.S.O. 1990, c. P.4, s. 3 (1).
[47] Joint owners have a prima facie right to partition and sale prior to trial: Afolabi v. Fala, 2014 ONSC 1713, 46 R.F.L. (7th) 75, at para. 27; Batler, at para. 7.
[48] In Sahebolamri v. Sahebolamri, 2018 ONSC 5691, at para. 13, the Divisional Court stated that “[t]his right exists unless the other joint tenant has made claims that would be prejudiced if the property is sold. The party that resists the application for sale, should have an order for exclusive interim possession, or be able to show that the claims she intends to put forward at trial will be prejudiced by an immediate sale.”
[49] Malice, oppression or vexatious intent may be taken into account: Garfella Apartments Inc. v. Chouduri, 2010 ONSC 3413, 102 O.R. (3d) 624, at para. 24. Oppression in this context includes hardship of such a nature as to amount to oppression. The court must consider the reasonableness of the parties as it relates to the application for partition and sale.
[50] A party opposing a sale has an obligation to put her best foot forward: Keyes v. Keyes, 2015 ONSC 1660, 60 R.F.L. (7th) 406, at paras 1, 35 and 43.
[51] The reasons advanced by Kasra in his affidavits as to why the Hollywood Home should not be sold are as follows.
The Trial is Imminent
[52] First, he argued that a settlement conference was scheduled for the next day and that a trial would likely be scheduled in the new year. He argued the sale should be deferred until this trial.
[53] I requested additional submissions from the parties on other issues where they advised that the trial has now been scheduled for June 22, 2022. There is no guarantee the trial will occur on this date, that it will be decided quickly or there will be no appeals.
Orders for Sale Should Not Be Made as a Matter of Course
[54] Second, Kasra cites Martin v. Martin (1992), 1992 CanLII 7402 (ON CA), 8 O.R. (3d) 41 (C.A.), for the proposition that it is settled law that sale orders before the resolution of issues under the Family Law Act, particularly equalization, should not be made as a matter of course. That is not what that case says. Justice Hoy said that orders for the sale of matrimonial homes should not be made as a matter of course. The Hollywood Property is not a matrimonial home.
Complicated Ownership Interests
[55] Third, Kasra argues that there are complicated ownership issues relating to the Hollywood Property. As noted above, it is registered in his mother’s name.
[56] The Trust Declaration dated May 15, 2016 (the “Trust Declaration”) states:
Whereas the Trustee [Kasra’s mother] is the purchaser of property located at 298 Hollywood Avenue…
And whereas the Trustee declares as follows, and the Beneficial Owners [Kasra’s Parents, Kasra and Elham] acknowledge as follows:
The Trustee shall hold title to the Trust Property in trust for the Beneficial Owners as tenants in common and not as joint tenants in the following interest:
[Kasra’s parents] as to 25 % interest
[Kasra and Elham] as to a 75 % interest (As Joint Tenants with respect to their share (75%)
[57] Paragraph 23 of Kasra’s August 27, 2021 affidavit states that the Trust Declaration was created to recognize that from 2012 to 2015, his parents “advanced large sums of monies totaling approximately $450,000 to the Applicant and me towards the construction, maintenance, mortgages, upkeep and carrying costs of the Hollywood Property.” It was agreed that they would reimburse his parents for these advances by “granting [them] a 25 % interest in the Hollywood Property.” In the same affidavit, he says that following the execution of the Trust Declaration, his parents loaned an additional $300,000 towards the construction and maintenance of the Hollywood Property. Kasra’s parents claim an additional property interest above the 25 % by virtue of these alleged advances.
[58] In his affidavits, Kasra set out his father’s testimony from questioning that he had advanced $450,000 but there is no evidence from Kasra’s parents before me regarding this alleged additional $300,000 advance above $450,000.
[59] Elham initially did not dispute Kasra’s parents’ 25 % interest. However she says she discovered evidence during this proceeding that Kasra deposited money into his parents’ account and that his parents then simply redirected that money to Kasra and Elham’s account. She says that this was a ruse to establish their interest in the Hollywood Property on the basis of payments that actually came from Elham and Kasra.
[60] On September 19, 2019, Justice Kristjanson ordered that Kasra’s parents provide proof in support of their purported loans to Elham and Kasra during the marriage or a “tracing showing where the funds they claim to have paid on account of the renovation cost of the [Hollywood Property] originate from” or a “tracing to show the source of funds deposited into their accounts to pay for the mortgage of the Hollywood Property.” They failed to.
[61] As a result, Elham obtained a tracing report which concluded that there was insufficient documentation to determine if Kasra’s parents contributed to the purchase of the Hollywood Property. Then Kasra obtained his own tracing report which criticized hers.
[62] The issues regarding the claimed contributions by Kasra’s parents are complex. Kasra says that the moneys cannot be traced because his parents would bring large sums of cash from Iran with them and convert them in currency conversion/cash shops. This will therefore be a credibility issue.
[63] Even if Kasra’s parents are successful on the entirety of their claim, including the additional property interest by virtue of the alleged additional $300,000 advance, this will not eliminate Elham’s interest in the Hollywood Property; the most that could happen is a reduction in her interest.
[64] The Partition Act provides as follows:
Who may be compelled to make partition or sale
2 All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to dower, tenants by the curtesy, mortgagees or other creditors having liens on, and all parties interested in, to or out of, any land in Ontario, may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only. R.S.O. 1990, c. P.4, s. 2.[Emphasis Added]
[65] Therefore, the particular manner in which title is held, which combines joint tenancy and tenants in common as well as trusts and beneficial interests in this case, is not a bar pursuant to the Partition Act; nor is the extent of Elham’s interest.
Proposed Amendment
[66] I note that even though there was no evidence on this given by the parties, in Kasra’s factum, he now says that he will be bringing a motion to amend his answer to seek a greater interest in the Hollywood Property. Presumably he means by constructive trust or resulting trust. In my view, this issue has been raised to further reduce Elham’s interest in the Hollywood Property in support of his argument that it should not be sold. In his last affidavit, Kasra set out a chart where he purports to set out that Elham’s financial contributions to the Hollywood Property were only approximately 10 %.
[67] This matter has been ongoing for four years.
[68] This late breaking proposed amendment is a strategic move to establish a legal reason why the Hollywood Property should not be sold, because at present there is not one, and Kasra has just figured this out. This kind of behaviour is exactly why Elham wishes to sell the Hollywood Property now instead of waiting until after trial. See my discussion below regarding Elham’s motivation.
[69] I note as well that, even if it had been pleaded, the likelihood of such a position being established on the record before me is low. Section 14 of the Family Law Act provides as follows:
The rule of law applying a presumption of a resulting trust shall be applied in questions of the ownership of property between spouses, as if they were not married, except that,
(a) the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants; and
(b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a). R.S.O. 1990, c. F.3, s. 14; 2005, c. 5, s. 27 (3).
[70] Kasra and Elham were involved in purchasing, developing and selling many properties which were funded in a variety of ways. The sale of some properties funded the purchase of others. Moneys were moved around.
[71] This is not a case where one spouse has toiled away supporting the other spouse’s business or other venture and then is denied any benefit. They were engaged in mutual enterprises. They both worked and Elham made more money. They are both sophisticated. They made deliberate decisions about how to hold title of these various properties on an ongoing basis knowing that their contributions were not equal. In such circumstances, in my view, it would be difficult to establish that there was some other intention or that there was not a juristic reason for any enrichment, even if Kasra can prove his greater contributions post separation.
[72] Indeed, Kasra has already given evidence that supports that there was no intention that any unequal contribution he made would give him a more significant ownership interest. In his first affidavit of August 27, 2021 he stated that “[i]t is my position in this proceeding that the Applicant should be responsible for her share of these expenses [construction costs],” at para. 32. If he had a different understanding four years earlier, I infer that he would have plead his case differently four years ago and not made this statement.
[73] As well, it cannot be that Elham must both share the construction costs in proportion to her 37.5 % ownership interest, and that Kasra also gets a higher property interest because of his contributions.
[74] Finally, based upon a chart in Kasra’s September 3, 2021 affidavit, the highest interest he and his parents could ever assert with respect to the Hollywood Property is 90 %-- even if he amends his claim, every one of his parents’ and his arguments succeeds and they prove a resulting or constructive trust in respect of every contribution to the construction they allege. Kasra or his parents put no law before me that suggests that at 10 % interest would preclude Elham from obtaining an order for sale.
[75] I want to be clear I am not finally deciding the issue of whether Kasra is entitled to a constructive or resulting trust. Because he raised it in his factum, as a matter of fairness, I have considered its relative strength on the record before me to assess whether this proposed amendment is a bar to the relief sought. In my view it is not.
[76] I note that I am making this order for sale without prejudice to Kasra’s ability to bring a motion to preserve the proceeds of sale of the Hollywood Property in any event to the full extent of the interest he claims.
Market Considerations
[77] Fourth, Kasra says that it makes no sense to sell the property in the context of a rising real estate market. He says they should wait.
[78] The parties estimate that the Hollywood Property is worth between $3,800,000 and $4,200,000. There is a mortgage of approximately $940,000. Kasra argues that if all the sales proceeds are held back and held in trust, they will earn minimal interest. Kasra provided no expert evidence on the real estate market or interest rates that such a large sum could earn.
[79] I am not persuaded that the real estate market will be better if the parties wait. If we are guessing, it is just as likely that the market could go down or have a cooling off period after the robust growth we have seen. A sale now in the midst of a strong real estate market is in both of their interests.
[80] In any event, in response to his concerns about leaving the proceeds in a bank account, Elham now agrees that the proceeds can be divided upon sale provided that there are no other encumbrances other than the current mortgage, with a 25 % holdback to secure Kasra’s parents’ claimed interest should it be successful.
[81] If Kasra thinks the real estate market is strong, he can take his share of the proceeds of the Hollywood Property and invest in real estate. There is no reason to force Elham to keep her interest in the real estate market if she does not wish to.
The Property’s Condition
[82] Fifth, Kasra says that the property is incapable of being sold in its current state at a favorable price because of necessary repairs like fixing leaking windows, plumbing irrigation issues and the elevator. He did not provide any evidence other than this bald statement. He says he spent $1,000,000 on construction. He lives there and he could have provided pictures, work orders, or other evidence. Elham says that this is a new home which only requires minimal repairs capable of being made in the time prior to any sale. Kasra has not explained why that is not the case. It is difficult to believe that he has been living there with his children for several years if it is uninhabitable or seriously flawed.
Elham’s Motivations
[83] Sixth, Kasra asserts that Elham wants this sale for no reason other than to force him out of his home and that she is motivated by malice. I am not satisfied that this is the case. She has been asserting for some time that the Hollywood Property should be sold.
[84] This is a high conflict case. For these motions alone, the parties have filed 641 pages of affidavit material.
[85] It will take time to obtain a decision and there may be appeals. Elham has described difficulties she has had dealing with Kasra. Although I am not in a position to make any final determinations on this issue, she alleges that Kasra is angry at her and has been abusive. She has provided written evidence of abusive communications from him. Here are some examples:
You think I have to pay for all your miseries and failures in your life?
Since 2 years ago, I insisted you see a psychologist or therapist. That’s your only way out of this mess. I have told u many times to stop this cheap and kidish behavour
Very shameful
You are sick
Go seek help and get medication.
I really don’t care about you, believe me, unlike u who has nothing in her life except fighting with me, in fact u deserve a lot of pity again…
See a psychiatrist..your delusions doesn’t make a liar, it makes you delusional
Yes, I am high in IQ and u r so low
Waste of time to write to you. Get help.
Shut up moron..Similar to when u opened your big mouth about school materials at the beginning of school year. I don’t have to deal with your nonsense…just stay away
Psychopath
Your children will hear these stories and be devastated to know they have such stupid and crazy mother.
[86] While Kasra asserts that she has also been derogatory towards him, he has no written evidence.
[87] It is clear they cannot agree on much and they do not get along. Elham is concerned that they will not even be able to agree on a listing price.
[88] If a sale order is delayed until after trial as suggested by Kasra, then Elham will have to wait until the conclusion of any appeals. More importantly, during this time she will also have to continue to negotiate and deal with Kasra regarding the Hollywood Property. She does not want to have to deal with Kasra any longer than she has to.
[89] Elham also worries that the Hollywood Property could be tied up in probate if Kasra’s mother passes away. Kasra’s mother has Parkinson’s disease and could not attend questioning on November 1, 2019 on the basis that she was “medically unable to attend.” In his September 3 affidavit he states that she has been “instructed by several medical specialists to avoid any stress that may cause her health to further deteriorate.” We are in the midst of a global pandemic which carries its own uncertain risks, even for people without underlying conditions.
[90] I note that section 3(2) of the Partition Act states that “[w]here the land is held in joint tenancy or tenancy in common or coparcenary by reason of a devise or an intestacy, no proceedings shall be taken until one year after the decease of the testator or person dying intestate in whom the land was vested.”
[91] In Clayton v. Clayton, 2018 ONSC 1612, at para. 3, the Court referenced the fact that it had dismissed a motion for partition and sale by the estate trustee of a joint holder of a property because it was brought before the expiration of one year based upon s. 3(2). Kasra relies upon Belchevski v. Dziemianko, 2014 ONSC 6353, 49 R.P.R. (5th) 303, where a joint owner died and the property was sold five months later. This case is distinguishable because the Court did not consider s. 3(2) of the Partition Act; apparently no one had raised it. I need not decide whether s. 3(2) would necessarily be a bar, but it would be available to anyone to whom the Hollywood Property passes as an argument to delay any sale.
[92] This is in addition to steps Elham would have to take to continue the action as against the estate of Kasra’s mother if she passes away. It is unclear whether s. 7 of the Family Law Rules applies since it references orders to continue against deceased spouses, or whether r. 11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, would apply. If it is Rule 11, then the proceeding is stayed until an order to continue has been obtained.
[93] There is no good reason why Elham should be forced to take the risk that Kasra’s mother passes away with the possibility that the Hollywood Property will be tied up in probate, due to s. 3(2) or for other reasons. Given the extreme “no-holds barred” litigation before me, there is more than a slight risk that someone would assert s. 3(2) or some other issue if Kasra’s mother passes away.
[94] The fact that Kasra lives at the Hollywood Property and that it will be inconvenient for him to move does not mean that Elham is motivated by ill will, as opposed to protecting her own interests.
The Best Interests of the Children
[95] Finally, Kasra says that a sale at this time would not be in the children’s best interests. The children have had to move their residence with Elham twice in the last year already. Further, he says that most of their friends reside close to the Hollywood Property and they love it. He says, without any additional evidence, that if they are forced to move again it would affect their general well-being and academic performance.
[96] I begin by pointing out that the Wimpole Property was the matrimonial home. When Kasra wished to sell it, Elham raised issues about moving the children from their home and Kasra took the position through counsel that the children had no particular attachment to the home they had lived in for 8 years. His counsel stated: “These children need to be with their parents, the house that they are living in is not of such significance. The children adapted immediately to the Hollywood Property and would adapt just as quick to a new home with their mother, it is the parents who are the glue that binds this family.” Elham was persuaded and agreed to the sale. (There are complicated allegations that she tried to obstruct that sale but I do not think these are relevant.)
[97] Now that Elham is seeking partition and sale of the Hollywood Property, Kasra raises the issue that the children should not be uprooted from their home.
[98] Obviously, this Court is not bound by the opinions of the parents. This Court must on its own consider whether the best interests of the children will suffer if the home is sold. However, the above statement is some evidence that the children have had no difficulty adapting to a change in the past, and Kasra has not offered any evidence of the children having difficulties other than bald statements.
[99] It is important that the Hollywood Property is not the matrimonial home and Kasra has made no legal claim for exclusive possession, nor would he have any legal basis to do so. Therefore, this property will ultimately have to be sold. Kasra cited no cases where courts prevented the sale of non-matrimonial homes on the basis of the best interests of the children.
[100] Even in cases involving the matrimonial home, courts have ordered the sale where there was insufficient evidence that the children had bonded to a particular home.
[101] For example, in Goldman v. Kudelyla, 2011 ONSC 2718, 5 R.F.L. (7th) 149, at paras. 26-27 and 39-40, the Court ordered the partition and sale of a matrimonial home where there was no evidence that the child would not be able to participate in the same activities and/or other day-to-day outings if she were to reside elsewhere. Additionally, there was no evidence that the child had bonded to the “particular home in a manner that would cause her harm if the home were sold” and there was “nothing [that distinguished] this home from others in the community.” This is similar to the case before me.
[102] It is always a hardship on children when parents separate and they have to move, but there is nothing special or prejudicial about the particular hardship alleged here. There is no evidence Kasra could not find another similar home in the same area. The children are nine and eleven years old and do not attend a school in the catchment area of the Hollywood Property. They have only lived in this home during the Father’s parenting time since December 16, 2018. Even if the home is listed it will take time to sell. The bald statement Kasra has made about the children’s welfare being in direct opposition to this sale is not sufficient.
[103] I do have some concern that the children had to move twice in the last year with Elham. However, this concern is dwarfed by the necessity of ending Elham and Kasra’s conflict in an efficient and timely manner. Selling the Hollywood Property will avoid the necessity of Kasra and Elham having to continue to deal with each other or this property after trial which will mean less conflict after trial. Resolving these issues in a timely manner is more in their children’s’ interests than the particular home they live in. They will eventually have to move in any event.
Inconsistent Positions
[104] Furthermore, Kasra’s position that he is entitled to be paid 50 % of the proceeds of the Beechwood and Wimpole Properties is contradictory to his opposition to Elham’s motion to sell the Hollywood Property. In paragraph 75 of his factum, he cites Gray v. Gray (1990), 1990 CanLII 12216 (ON SC), 31 R.F.L. (3d) 97, for the proposition that “[t]he Family Law Act is a debtor-creditor statute and each spouse is entitled, subject to court order, to deal with his property as he or she sees fit.” See also Christie, at para. 4.
[105] He also argues, at para. 76, that “[t]he Court should not restrict a party’s ability to use their own property absent a restraining order pursuant to section 12 or 40 of the Family Law Act.”
[106] For the last three years, expenses associated with the Hollywood Property in the approximate amount of $4,500 per month have been paid by Elham and Kasra through proceeds of sale of other properties currently in their joint account. It is Kasra’s position as set out in paragraph 27 of his affidavit that “Elham must continue to share the carrying costs of the Hollywood Property.”
[107] While he is entitled to deal with his property as he wishes by receiving his full share of the proceeds from Wimpole and Beechwood, with respect to the Hollywood Property, he asserts that Elham may not. She cannot live in the home, she cannot sell her interest, and she must continue to fund expenses for a property that he lives in.
[108] I see no reason why Elham should have to wait until the timing is better for Kasra.
Should Any Amounts to be held back from Hollywood Proceeds
[109] Elham agreed in her September 8, 2021 affidavit that all proceeds from the sale of the Hollywood Property but 25 % could be released after sale to secure Kasra’s parents’ claim.
[110] No one argued that anything more should be held back. Indeed, the only submission that Kasra’s counsel made with respect to the sale was that if I ordered it, I should not permit the real estate agent selected by Elham to list the property.
[111] Therefore, I am ordering the sale of the Hollywood Property with a minimum amount of 25 % of the proceeds to be held in trust to secure Kasra’s Parents’ claim.
[112] This is without prejudice to any of the parties making a subsequent motion for a preservation order with respect to any additional proceeds of sale.
[113] Therefore, I order as follows:
- The proceeds of sale of the properties municipally known as 53 Wimpole Drive, Toronto Ontario (the “Wimpole Property”) and 169 Beechwood Avenue, Toronto, Ontario (“Beechwood Property”) held in trust in the trust account of Ms. Jolanta Kryskowicz shall be dealt with as follow:
a. The sum of $2,077,785.18 shall be released to each of Elham Mohammadi and Kasra Ardalan within 7 days of the date of this order.
b. The balance on $778,000 shall remain in trust with Ms. Jolanta Kryskowicz until further order of this court or agreement of the parties.
The property municipally known as 298 Hollywood Avenue, Toronto, Ontario (the “Hollywood Property”) shall be sold pursuant to the Partition and Sale Act.
The Hollywood Property shall be listed with a mutually agreeable agent at a price recommended by the listing agent.
All parties shall be entitled to be involved in the sale process.
The parties shall direct the listing agent to communicate all issues concerning the sale of the Hollywood Property to all parties and to present all offers that are made to all parties.
The parties shall accept the first offer that is within 3 % of the listing price and if there are two offers that are both within 3 % of the listing price, then the higher of the two offers shall be accepted.
All parties shall cooperate fully with the sale process and shall not interfere in any way with the sale of the Hollywood Property.
If there are any issues arising out of this order the parties may return to this Court on an urgent basis and on short notice.
A minimum of 25% of the proceeds of sale of the Hollywood Property shall remain in trust.
This order is without prejudice to any of the parties bringing a motion for the preservation of the balance of the proceeds.
If no motion for preservation is brought before the sale is completed, then the proceeds minus 25 % shall be distributed in equal portions to Kasra and Elham.
If the parties cannot agree on costs, they may make submissions no longer than 7 pages each as follows:
a. Elham within 5 days; and
b. Kasra and Kasra’s parents within 5 days thereafter.
Papageorgiou, J.
Date Released: September 28, 2021
[^1]: Kasra has relied heavily on Taus. I note that in Taus, at para. 31, the Court said that there must be “some” evidence that a preservation order is necessary. Then it said that a prima facie case must be made out. Then, at para. 33, it confirmed that the very high threshold for a Mareva injunction is not applicable. I do not find this case persuasive because there are conflicting statements in it as to the standard.